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Strategies & Market Trends : APMP (formerly APM)

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To: Brian Lempel who wrote (10248)	3/8/1998 10:47:00 PM
From: AlienTech	Read Replies (2) of 13456

Shorting Against the Box AMAZING! Just AMAZING!!!!! Shorting-against-the-box is the act of selling short securities that you already own. When you short against the box, you have locked in your gain or loss, since for every dollar the long position gains, the short position will lose and vice versa. An alternative way to short against the box is to buy a put on your stock. This may or may not be less expensive than doing the short sale. The IRS considers buying a put against stock the same as shorting against the box. The 1997 revisions to the tax code define (or extend) the idea of "constructive sales." A constructive sale is a set of transactions which removes one's risk of loss in a security even if the security wasn't actually disposed of. Shorting against the box as well as certain options and futures transactions are defined as being constructive sales. And any constructive sale is interpreted as being the same as a real sale, which is why this strategy is no longer effective (don't you hate it when the rules change in the middle of the game?). For those who have read this far, there does appear to be a small loophole in the 1997 revisions that permit shorting against the box to delay a taxable event. If you have a short against the box position and then buy in the short within 30 days of the start of the tax year and leave the long position at risk for at least 60 days before ofsetting it again, the constructive sales rules do not apply. So it appears that you can continue shorting against the box to defer gains, but you have to temporarily cover the short and be exposed for at least 60 days at the beginning of each and every year. Why did I bring this up? Well It could keep APM in the 10-15 trading range as those short cover and reshort.. Might be some money to be made here.. Stolen from... 165.194.7.60

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